U.S. home prices decline for the fourth month in a row

Dec. 27 (UPI) -- Average U.S. home prices declined for the fourth straight month and aggressive rate policies from the Federal Reserve suggest downward trends will continue, analysis released Tuesday found.

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index showed the average price of a home increased by 9.2% on an annual basis in October, down from the 10.7% increase reported in the previous month.

The decline marks the fourth month in a row for a slump in home prices, but follows the major surge that extended from late 2021 to the first half of the year.

"Prices declined in every city in October, with a median change of -0.9%," said Craig J. Lazzara, the managing director at S&P Dow Jones Indices. "Year-over-year price gains in all 20 cities were lower in October than they had been in September; the median year-over-year increase across the 20 cities was 8.3%."

That follows data from the National Association of Realtors that showed existing home sales declined 7.7% in November, relative to October levels. Year-over-year, sales fell from 6.33 million in November 2021 to 4.09 million last month.

The Mortgage Bankers Association, meanwhile, reported that mortgage applications to purchase a home declined by 0.1% and are around 36% lower than during the same period last year.

The average rate on a 30-year fixed-rate mortgage with balances of $647,200 or less was 6.34%, down from the previous rate of 6.42%. The rate on a 30-year mortgage backed by the FHA declined from 6.4% to 6.35%. The mortgage on a 30-year fixed-rate mortgage in January was closer to 3.5%.

Inflation in general, meanwhile, remains high. The increase of 7.1% in the shelter component of the U.S. Consumer Price Index matches the overall rate of inflation.

The U.S. Federal Reserve is trying to dampen that inflation with steady hikes in lending rates, which could cast dark clouds over housing for the foreseeable future.

"As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices," Lazzara said. "Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken."